01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Roper Industries, Inc. (ROP) reported net sales of $2.05 billiona for 2009, down from $2.31 billion in 2008, a decrease of 11.1%, which the company attributed to the worldwide economic slump.
Net earnings were $239.5 millionb, or $2.58 per diluted share, compared with $281.9 million, or $3.01 per diluted share, in 2008. Income from operations was $395.4 million versus $486.2 million a year earlier, and the effective income tax rate fell to 29.5% from 34.3%, which the company attributed largely to foreign tax planning and the release of reserves for uncertain tax provisions. The company remained acquisitive during the downturn, completing two 2009 acquisitions for an aggregate purchase price of $353 million: United Toll Systems, LLC (October 30, 2009) and Verathon, Inc. (December 3, 2009).
Total debt was $1.2 billionc at December 31, 2009, or 32.3% of total capital, down from 38.7% a year earlier. The company completed a public offering of 2,300,000 shares of common stock in December 2009 for net proceeds of approximately $121.4 million, and it repaid its $350 million term loan in September 2009 using proceeds from a $500 million 6.25% senior note offering due 2019. For investors, the filing shows a company with $2.39 billion of goodwill, which represented 55% of total assets of $4.33 billion, and a meaningful sensitivity to macroeconomic conditions.
Operating segments were mixed: RF Technology sales rose 3.3% to $717.8 milliond, while Energy Systems and Controls fell 19.6% and Industrial Technology fell 22.0%. The Board raised the quarterly dividend to $0.0950 per share from $0.0825, effective with the January 29, 2010 payment.
02—Key points
Key Highlights
- Net sales declined 11.1% to $2.05 billion in 2009 from $2.31 billion in 2008, attributed to the worldwide economic slump.
- Diluted earnings per share were $2.58 in 2009, compared with $3.01 in 2008; net earnings were $239.5 million versus $281.9 million.
- Two acquisitions were completed in 2009 (United Toll Systems and Verathon) for an aggregate purchase price of $353 million.
- Total debt was $1.2 billion at year-end 2009, or 32.3% of total capital, down from 38.7% at year-end 2008.
- Public offering of 2,300,000 common shares in December 2009 generated approximately $121.4 million net of costs.
- Goodwill of $2.39 billion represented 55% of total assets of $4.33 billion, a key risk factor for potential impairment.
- Quarterly dividend increased to $0.0950 per share from $0.0825, effective with the January 29, 2010 payment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Roper Technologies kept $0.12.
- Revenue$2.05B100.0%
- Cost of revenue−$1.01B49.1%
- Gross profit$1.04B50.9%
- Operating costs−$647.7M31.6%
- Operating income$395.4M19.3%
- Interest, other & tax−$155.9M7.6%
- Net income$239.5M11.7%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $2.05B$2.31B | −11.1% |
| Cost of Revenue | $1.01B$1.12B | −10.0% |
| Gross Profit | $1.04B$1.19B | −12.2% |
| R&D Expenses | $83.40M$87.40M | −4.6% |
| SG&A Expenses | $647.74M$702.13M | −7.7% |
| Operating Income | $395.40M$486.16M | −18.7% |
| Interest Expense | $58.54M$60.82M | −3.7% |
| Net Income | $239.48M$281.87M | −15.0% |
| EPS (Basic) | $2.64$3.15 | −16.2% |
| EPS (Diluted) | $2.58$3.01 | −14.3% |
| Shares Outstanding (Basic) | 90.69M89.47M | +1.4% |
| Shares Outstanding (Diluted) | 92.82M93.70M | −0.9% |
05—Questions
Frequently Asked Questions
How did Roper's revenue and profitability change in 2009?
Net sales fell 11.1% to $2.05 billion from $2.31 billion, which the company attributed to the worldwide economic slump. Income from operations dropped to $395.4 million from $486.2 million, and net earnings declined to $239.5 million from $281.9 million. Diluted EPS was $2.58 versus $3.01.
Which business segments performed best and worst in 2009?
RF Technology was the only segment with growth, with net sales up 3.3% to $717.8 million, aided by acquisitions. Industrial Technology fell 22.0% to $536.2 million, and Energy Systems and Controls fell 19.6% to $440.9 million. Scientific and Industrial Imaging declined 5.5% to $354.8 million.
How is Roper managing its debt?
Total debt was $1.2 billion at December 31, 2009, down from $1.3 billion a year earlier. The company repaid its $350 million term loan in September 2009 using proceeds from $500 million of 6.25% senior notes due 2019, and it used the December 2009 equity offering to reduce debt further. The company stated it was in compliance with all debt covenants.
What risks does the filing highlight regarding goodwill and acquisitions?
Goodwill totaled $2.39 billion, or 55% of total assets, so a significant decline in business unit performance could trigger a non-cash impairment charge. The company also noted that acquisitions carry integration risks, the potential for unforeseen liabilities, and the possibility of additional indebtedness or dilutive equity issuances.
Will the dividend continue to grow?
The Board increased the quarterly dividend to $0.0950 per share from $0.0825, beginning with the January 29, 2010 payment. The company stated that it has increased its dividend annually since its February 1992 initial public offering. Future dividends remain at the sole discretion of the Board, depending on profitability, financial condition and other factors.
06—Continue